To Hedge Translation Exposure, MNCs Could ____ That Their Foreign

question 21

Multiple Choice

To hedge translation exposure, MNCs could ____ that their foreign subsidiaries receive as earnings to create a cash outflow in the currency to offset the earnings received in that currency.

• A)purchase the currency forward
• B)sell the currency forward
• C)purchase futures contracts of the currency
• D)A or C
• E)none of the above

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Definitions:

Inductive Reasoning

A method of reasoning in which specific observations or sets of observations are used to make broad generalizations.

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The branch of economics that analyzes data to understand and explain economic phenomena.

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Systematic frameworks for analyzing economic phenomena, developed to explain and predict economic patterns and behaviors.